Energy costs rise by most since 2005 as gas prices weigh on consumers
The energy index rose 3.9% last month according to the Bureau of Labor Statistics’ Consumer Price Index (CPI) published Friday after a 2.7% decline in April. Gasoline, fuel oil and natural gas prices all increased in May.
Gasoline prices rose 4.1% month-over-month, fuel oil spiked 16.9% from the prior month, and natural gas also rose 8% during the same span.
The energy index rose 34.6% over the same month last year, the largest annual increase since September 2005. The gasoline index increased 48.7% during the same span. Meanwhile fuel oil more has than doubled, rising 106.7%. That reading represents the largest 12 month increase in the history of the series, which dates to 1935.
Friday’s CPI print also comes as gasoline prices hit yet another record high. The national average for regular driving fuel on Friday was $4.99, according to AAA. In 18 states, the average price of a gallon of gas is already over $5; in California, average gas prices are above $6 per gallon.
Some consumers appear to be modifying their driving habits, or pushing back against stick shock at the pump.
“We have already seen the effect of high prices on demand,” Andy Lipow of Lipow Oil Associates recently told Yahoo Finance. “According to the EIA, gasoline demand over the last 4 weeks is about 2% less than this time last year. As prices continue to rise, I expect that the demand will continue to fall off compared to 2021.”
And these high gas prices are disproportionately impacting lower income drivers. A recent study showed U.S. householders earning less than $40,000 per year will spend anywhere from 11-28% of their after-tax take home pay on gasoline if prices reach $6.
JPMorgan analysts have predicted the national average of gasoline could hit $6 per gallon — and go even higher by August.
Diesel prices are also at record highs, with the national average at $5.75 per gallon.